Rishi Sunak’s handling of the Nadhim Zahawi row has been defended as “fair” by a ministerial ally.

The Prime Minister sacked the Conservative Party chairman early on Sunday morning, shortly after an ethics inquiry into Mr Zahawi found that he had committed a “serious breach” in the handling of his tax affairs.

Critics of Mr Sunak said he should have acted sooner, while allies of Mr Zahawi complained he had not been given the chance to make his case.

But health minister Helen Whately defended Mr Sunak’s approach, which led to the party chairman being jettisoned following an investigation by the independent adviser on ministers’ interests, Sir Laurie Magnus.

Ms Whately told Times Radio that Mr Sunak “was under pressure to go straight to it and people were saying he should have moved faster, but actually he followed a fair process”.

“Sir Laurie Magnus looked into it, he set out in his letter very clearly what did or didn’t happen, and that was the basis on which the Prime Minister removed Nadhim Zahawi from office.”

She told Sky News that Mr Zahawi had been given the chance to come clean about his tax affairs at various points during his ministerial career.

“Those were opportunities when he could have been transparent and he wasn’t,” she said.

Sir Laurie’s investigation concluded that Mr Zahawi breached the ministerial code by failing to be transparent about the multimillion-pound settlement with HM Revenue & Customs reached while he was chancellor, which included paying a penalty.

Allies of Mr Zahawi claimed that the MP had lost his job after being given only limited time to make his case, with the Telegraph citing claims suggesting he was only given a 30-minute meeting with the independent adviser to defend himself.

He was also reported to have told Sir Tom Scholar, the then-Treasury permanent secretary, about the HMRC investigation and the fine – Sir Tom was sacked when Liz Truss became prime minister.

Stratford-on-Avon MP Mr Zahawi did not comment explicitly on the row in his letter to the Prime Minister following his sacking, instead taking aim at the media as he complained “about the conduct from some of the fourth estate in recent weeks”.

The Liberal Democrats wrote to Mr Sunak saying he should now strip Mr Zahawi of the Tory whip if he refuses to quit as an MP.

Deputy leader Daisy Cooper said: “Sunak dragged his feet for weeks over this scandal. He must now act swiftly if he’s serious about restoring integrity to this sleaze-ridden Conservative Government.”

Labour chairwoman Anneliese Dodds told the BBC Radio 4 Today programme her party has also written to the PM to ask when he found out about the HMRC investigation into the former Conservative Party chairman, adding that the PM “needed a backbone” and should have sacked Mr Zahawi earlier because “the facts were clear”.

She said: “There are serious questions for Rishi Sunak to answer. What did he know about the investigation into Nadhim Zahawi, the amount of money he had paid in unpaid tax and the penalty he had to pay?

“Why did Rishi Sunak say in Parliament that there weren’t questions to be answered about Mr Zahawi’s tax affairs, and why do we see our Prime Minister continuing to prop up such a rogues’ gallery of ministers?”

Ms Dodds referred to the case of Deputy Prime Minister Dominic Raab, who remains under investigation by senior lawyer Adam Tolley KC over bullying complaints. He has denied all allegations.

Sir Laurie’s four-page report, received by Mr Sunak on Sunday morning, concluded that “Mr Zahawi’s conduct as a minister has fallen below the high standards that, as Prime Minister, you rightly expect from those who serve in your Government”.

Mr Zahawi’s failure to tell officials about the tax investigation “constitute a serious failure to meet the standards set out in the ministerial code”, Sir Laurie said.

The Tory chairman had shown “insufficient regard for the general principles of the Ministerial Code and the requirements in particular, under the seven Principles of Public Life, to be honest, open and an exemplary leader through his own behaviour”.

Sir Laurie said: “In the appointments process for the governments formed in September 2022 and October 2022, Mr Zahawi failed to disclose relevant information – in this case the nature of the investigation and its outcome in a penalty – at the time of his appointment, including to Cabinet Office officials who support that process.

“Without knowledge of that information, the Cabinet Office was not in a position to inform the appointing Prime Minister.”

Stephen Massey, the party’s chief executive, has stepped in as interim chair until Mr Sunak chooses a successor.

But already there has been speculation about who could take up the role, with former Cabinet minister Jacob Rees-Mogg quick to float Boris Johnson as a possible replacement.

“He has all the right attributes for a party chairman. He is charismatic, he rallies the troops. He’s a sort of fully-loaded Conservative. So I think that type of personality would be a very good one for a party chairman,” Mr Rees-Mogg told GB News.